Small Company Fund
ANNUAL REPORT
October 31, 1995
<PAGE>
THE 59 WALL STREET SMALL COMPANY FUND
STATEMENT OF ASSETS AND LIABILITIES
October 31, 1995
ASSETS:
Investment in U.S. Small Company Portfolio (the
"Portfolio"), at value (cost $25,545,135) (Note 1) .. $29,423,912
-----------
Total Assets ..................................... 29,423,912
-----------
LIABILITIES:
Payables for:
Expense payment fee (Note 2) ......................... 12,689
Administrative fee (Note 2) .......................... 3,064
-----------
Total Liabilities ................................ 15,753
-----------
NET ASSETS ................................................... $29,408,159
===========
Net Assets Consist of:
Paid-in capital.......................................... $25,686,520
Accumulated undistributed net investment income ......... 25,637
Accumulated net realized loss ........................... (182,775)
Net unrealized appreciation ............................. 3,878,777
-----------
Net Assets ................................................... $29,408,159
===========
NET ASSET VALUE AND OFFERING PRICE PER SHARE
($29,408,159 / 2,296,413 shares) ........................ $ 12.81
=======
See Notes to Financial Statements.
<PAGE>
THE 59 WALL STREET SMALL COMPANY FUND
STATEMENT OF OPERATIONS
For the year ended October 31, 1995
INVESTMENT INCOME:
Income:
Dividend income ...................................... $ 89,602
Interest income ...................................... 45,755
Investment income allocated from Portfolio ........... 291,064
Expenses allocated from Portfolio .................... (186,862)
-----------
Total Income ..................................... 239,559
-----------
Expenses:
Expense payment fee (Note 2) ......................... 118,824
Administrative fee (Note 2) .......................... 41,328
-----------
Total Expenses ................................... 160,152
-----------
Net Investment Income ............................ 79,407
-----------
NET REALIZED AND UNREALIZED GAIN (Notes 1 and 3):
Net realized loss on investments ..................... (81,560)
Net realized gain from investments allocated
from Portfolio....................................... 1,568,044
Net change in unrealized appreciation on investments . 1,326,258
-----------
Net Realized and Unrealized Gain ................. 2,812,742
-----------
Net Increase in Net Assets Resulting from Operations . $ 2,892,149
===========
See Notes to Financial Statements.
<PAGE>
THE 59 WALL STREET SMALL COMPANY FUND
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
For the years ended October 31,
------------------------------
1995 1994
------------ ------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
Operations:
Net investment income ................................... $ 79,407 $ 169,234
Net realized gain (loss) on investments ................. 1,486,484 (1,669,259)
Net change in unrealized appreciation on investments .... 1,326,258 (1,934,369)
------------ ------------
Net increase (decrease) in net assets resulting
from operations ................................... 2,892,149 (3,434,394)
------------ ------------
Dividends and distributions declared (Note 1):
From net investment income .............................. (212,045) (11,231)
From net realized gains ................................. -- (1,296,730)
In excess of net realized gains ......................... -- (9,455)
------------ ------------
Total dividends and distributions declared .......... (212,045) (1,317,416)
------------ ------------
Capital stock transactions (Note 4):
Net proceeds from sales of capital stock ................ 1,117,639 11,606,326
Net asset value of capital stock issued to shareholders
in reinvestment of dividends and distributions ...... 72,843 702,379
Net cost of capital stock redeemed ...................... (13,863,611) (9,217,592)
------------ ------------
Net (decrease) increase in net assets resulting from
capital stock transactions ........................ (12,673,129) 3,091,113
------------ ------------
Total decrease in net assets ...................... (9,993,025) (1,660,697)
NET ASSETS:
Beginning of year ......................................... 39,401,184 41,061,881
------------ ------------
End of year (including undistributed net investment
income of $25,637 and $158,275, respectively) ......... $ 29,408,159 $ 39,401,184
============ ============
</TABLE>
See Notes to Financial Statements.
<PAGE>
THE 59 WALL STREET SMALL COMPANY FUND
FINANCIAL HIGHLIGHTS
Selected per share data and ratios for a share outstanding
throughout each period
<TABLE>
<CAPTION>
For the period
April 23, 1991
For the years ended October 31, (commencement of
-------------------------------------------- operations) to
1995 1994 1993 1992 October 31, 1991
------- ------- ------- ------- ---------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period............. $11.54 $12.92 $10.70 $10.36 $10.00
Income from investment operations:
Net investment income.......................... 0.03 0.05 0.01 0.02 0.01
Net realized and unrealized gain (loss) ....... 1.31 (1.04) 2.84 0.34 0.35
Less dividends and distributions (Note 1):
From net investment income..................... (0.07) (0.01) (0.01) (0.02) --
From net realized gains ....................... -- (0.38) (0.62) -- --
In excess of net realized gains................ -- (0.00)* -- -- --
------ ------ ------ ------ ------
Net asset value, end of period................... $12.81 $11.54 $12.92 $10.70 $10.36
====== ====== ====== ====== ======
Cumulative investment return..................... 11.69% (7.81)% 27.00% 3.46% 3.60%
Ratios/Supplemental Data:
Net assets, end of period (000's omitted)...... $29,408 $39,401 $41,062 $20,504 $11,097
Ratio of expenses to average net assets
(includes allocated Portfolio expenses)
(Note 2)***.................................. 1.10% 1.10% 1.10% 1.10% 1.10%**
Ratio of net investment income to average
net assets (includes allocated Portfolio
expenses).................................... 0.25% 0.40% 0.04% 0.16% 0.36%**
Portfolio turnover rate........................ 16%(A) 140% 116% 67% 8%
Average commission rate paid per share......... $0.08 (A) -- -- -- --
</TABLE>
- --------------
* Less than $0.01 per share.
** Annualized.
*** Had the expense payment agreement not been in place, the ratio of expenses
to average net assets for the years ended October 31, 1995, 1994, 1993 and
1992 and for the period ended October 31, 1991 would have been 1.27%,
1.21%, 1.38%, 1.46% and 2.25%, respectively. For the same periods, the
cumulative return of the Fund would have been 11.52%, (7.94)%, 26.72%,
3.10% and 2.45%, respectively. Furthermore, the ratio of expenses to
average net assets for the year ended October 31, 1995 reflect fees paid
with brokerage commissions and fees reduced in connection with specific
agreements. Had these arrangements not been in place, the ratio would have
been 1.39%.
(A) Portfolio turnover and average commission paid represents the rate of
portfolio activity and average commission rate for the period while the
Fund was making investments directly in securities. The portfolio turnover
rate and average commission rate paid for the period since the Fund
transferred all of its investable assets to the Portfolio is shown in the
Portfolio's Financial Highlights which is included elsewhere in this
report.
See Notes to Financial Statements.
<PAGE>
THE 59 WALL STREET SMALL COMPANY FUND
NOTES TO FINANCIAL STATEMENTS
1. Organization and Significant Accounting Policies. The 59 Wall Street
Small Company Fund (the "Fund") is a separate diversified series of The 59 Wall
Street Fund, Inc. (the "Corporation") which is registered under the Investment
Company Act of 1940, as amended. The Corporation is an open-end management
investment company organized under the laws of the State of Maryland on July 16,
1990. The Fund commenced operations on April 23, 1991.
On January 17, 1995, the Fund invested all of its investable assets in the
U.S. Small Company Portfolio (the "Portfolio"), a diversified, open-end
management investment company having the same investment objectives as the Fund.
The value of such investment reflects the Fund's proportionate interest in the
net assets of the Portfolio (approximately 57% at October 31, 1995). The
performance of the Fund is directly affected by the performance of the
Portfolio. The financial statements of the Portfolio, including the portfolio of
investments, are included elsewhere in this report and should be read in
connection with the Fund's financial statements.
The following is a summary of significant accounting policies for the
Fund.
A. Valuation of Investments. Valuation of investments by the
Portfolio is discussed in Note 1 of the Portfolio's Notes to Financial
Statements which are included elsewhere in this report.
B. Accounting for Investments. The Fund records its share of net
investment income, realized and unrealized gain and loss and adjusts its
investment in the Portfolio each day. All the net investment income and
realized and unrealized gain and loss of the Portfolio is allocated pro
rata among the Fund and other investors in the Portfolio at the time of
such determination.
C. Federal Income Taxes. It is the Corporation's policy to comply
with the requirements of the Internal Revenue Code applicable to regulated
investment companies and to distribute all of its taxable income to its
shareholders. Accordingly, no federal income tax provision is required.
Each Fund files a tax return annually using tax accounting methods
required under provisions of the Internal Revenue Code which may differ
from generally accepted accounting principles, the basis on which these
financial statements are prepared. Accordingly, the amount of net
investment income and net realized gain reported in these financial
statements may differ from that reported on the Fund's tax return due to
certain book-to-tax timing differences such as losses deferred due to
"wash sale" transactions and utilization of capital loss carryforwards.
These timing differences may result in temporary over-distributions for
financial statement purposes and are classified as distributions in excess
of accumulated net realized gains or net investment income. As such, the
character of distributions to shareholders reported in the Financial
Highlights table may differ from that reported to shareholders on Form
1099-DIV. These distributions do not constitute a return of capital.
D. Dividends and Distributions to Shareholders. Dividends and
distributions to shareholders are recorded on the ex-dividend date.
2. Transactions with Affiliates.
Investment Advisory Agreement. Through January 16, 1995 the Corporation
had an investment advisory agreement with Brown Brothers Harriman & Co. (the
"Adviser") for which the Adviser received a fee from the Fund calculated daily
and paid monthly at an annual rate equivalent to 0.65% of the Fund`s average
daily net assets. This agreement was terminated on January 17, 1995 upon the
Corporation investing the assets of the Fund in the Portfolio. See Note 2 of the
Portfolio's Notes to Financial Statements which are included elsewhere in this
report.
Administrative Fee. The Corporation has an administrative agreement with
Brown Brothers Harriman & Co. (the "Administrator") for which the Administrator
receives a fee from the Fund calculated daily and paid monthly at an annual rate
equivalent to 0.125% of the Fund's average daily net assets. The Administrator
<PAGE>
THE 59 WALL STREET SMALL COMPANY FUND
NOTES TO FINANCIAL STATEMENTS (continued)
has a subadministration services agreement with 59 Wall Street Administrators,
Inc. for which 59 Wall Street Administrators, Inc. receives such compensation as
is from time to time agreed upon, but not in excess of the amount paid to the
Administrator. Prior to January 17, 1995, the Administrator earned a fee
calculated at an annual rate equivalent to 0.15% of the Fund's average daily net
assets. For the year ended October 31, 1995, the Fund incurred $41,328 for
administrative services.
Shareholder Servicing/Eligible Institution Agreement. The Corporation has
a shareholder servicing agreement and an eligible institution agreement with
Brown Brothers Harriman & Co. for which Brown Brothers Harriman & Co. receives a
fee from the Fund calculated daily and paid monthly at an annual rate equivalent
to 0.25% of the Fund's average daily net assets.
Expense Payment Fee. 59 Wall Street Administrators, Inc. pays certain
expenses of the Fund and receives a fee from the Fund, computed and paid
monthly, such that after such fee the aggregate expenses will not exceed 1.10%
of the average daily net assets of the Fund. For the year ended October 31,
1995, 59 Wall Street Administrators, Inc. incurred approximately $172,000 in
expenses, including investment advisory fees of $49,267 and shareholder
servicing/eligible institution fees of $78,887, on behalf of the Fund. The
expense payment fee agreement of the Fund will terminate on July 1, 1997.
3. Investment Transactions. Investment transactions of the Portfolio are
discussed in Note 3 of the Portfolio's Notes to Financial Statements which are
included elsewhere in this report. For the period November 1, 1994 through
January 16, 1995, the cost of purchases and the proceeds of sales of investment
securities other than short-term investments were $5,083,752 and $5,744,369,
respectively. There were no purchases or sales of U.S. government obligations
during the period. For that same period, the Fund paid brokerage commissions of
$12,132 to Brown Brothers Harriman & Co. for transactions executed on its
behalf. Custody and transfer agent fees for the Fund paid pursuant to the
expense payment agreement were reduced by $25,952 as a result of the Fund
directing a portion of its portfolio transactions to certain brokers.
Additionally, custody fees for the Fund paid pursuant to the expense payment
agreement were reduced by $11,770 as a result of an expense offset arrangement
with the Fund's custodian.
4. Capital Stock. The Corporation is permitted to issue 2,500,000,000
shares of capital stock, par value $.001 per share, of which 25,000,000 shares
have been classified as shares of the Fund. Transactions in shares of capital
stock were as follows:
For the years ended October 31,
-------------------------------
1995 1994
---------- --------
Capital stock sold 93,354 935,250
Capital stock issued in connection with
reinvestment of dividends and
distributions 6,751 58,000
Capital stock repurchased (1,216,651) (758,757)
--------- -------
Net (decrease) increase (1,116,546) 234,493
========= =======
5. Federal Income Tax Status. At October 31, 1995, the Small Company Fund
had a net capital loss carryover of approximately $160,800, available through
October 31, 2002 to offset future capital gains, to the extent provided by
regulations. To the extent that this net capital loss carryover is used to
offset future capital gains, it is probable that the gains so offset will not be
distributed to shareholders since any such distributions may be taxable to
shareholders as ordinary income.
<PAGE>
INDEPENDENT AUDITORS' REPORT
Board of Directors and Shareholders
The 59 Wall Street Small Company Fund (a series of
The 59 Wall Street Fund, Inc.):
We have audited the accompanying statement of assets and liabilities of
The 59 Wall Street Small Company Fund (a series of The 59 Wall Street Fund,
Inc.) as of October 31, 1995, the related statement of operations for the year
then ended, the statement of changes in net assets for the years ended October
31, 1995 and 1994, and the financial highlights for each of the years in the
five-year period ended October 31, 1995. These financial statements and
financial highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, such financial statements and financial highlights present
fairly, in all material respects, the financial position of The 59 Wall Street
Small Company Fund at October 31, 1995, the results of its operations, the
changes in its net assets, and its financial highlights for the respective
stated periods in conformity with generally accepted accounting principles.
DELOITTE & TOUCHE LLP
Boston, Massachusetts
December 12, 1995
<PAGE>
MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE
The following investment management strategies and techniques have
materially affected the Funds' performance for the fiscal year ended October 31,
1995.
SMALL COMPANY FUND
Over the course of the year ending October 31, 1995, several investment
management strategies and techniques materially affected Fund performance. Small
capitalization stocks, as measured by the Russell 2000, rose 18.3% while the
Fund's total return was a gain of 11.7%. The Fund's industry weightings were
generally comparable to those of the Fund's benchmark, but imprudent
concentrations were reduced, generating mixed results. Second, after extensive
research, several additions were made to both the Growth and the Value models
during the year. In implementing these adjustments, the Fund incurred increased
trading costs. Third, the Fund's strategy of selecting higher quality companies
resulted in the Fund's forgoing some investment opportunities that were judged
to be more risky but subsequently provided very good relative returns. Fourth,
for a portion of the year, the Fund held more Growth stocks than Value stocks.
This benefitted returns as the Growth sector of the market outperformed the
Value sector over the last twelve months.
[The following table was represented by a chart in the printed matter]
Small Company Fund
Growth of $10,000
Line graph with two axes: the X-axis represents years of operations; the Y-axis
represents dollar value. The graph plots two lines: the first line represents
the growth of a ten thousand dollar investment in the Fund from April 23, 1991
to October 31, 1995; the second line represents the growth of a ten thousand
dollar investment in a portfolio of securities reflecting the composition of the
Russell 2000 Index for the same time period. The graph points are as follows:
Year Fund* Russell 2000 Index
---- ----- ------------------
4/23/91 $10,000 $10,000
4/30/91 9,700 9,824
5/31/91 10,190 10,292
6/30/91 9,460 9,697
7/31/91 9,840 10,036
8/31/91 10,080 10,406
9/30/91 10,090 10,487
10/31/91 10,360 10,764
11/30/91 9,820 10,265
12/31/91 10,949 11,086
1/31/92 11,530 22,986
2/29/92 11,720 12,336
3/31/92 11,069 11,920
4/30/92 10,468 11,501
5/31/92 10,478 11,654
6/30/92 9,967 11,107
7/31/92 10,348 11,493
8/31/92 10,097 11,168
9/30/92 10,298 11,425
10/31/92 10,718 11,786
11/30/92 11,730 12,688
12/31/92 12,114 13,129
1/31/93 12,539 13,573
2/28/93 12,144 13,259
3/31/93 12,235 13,688
4/30/93 11,881 13,312
5/31/93 12,438 13,904
6/30/93 12,438 13,990
7/31/93 12,610 14,184
8/31/93 13,086 14,797
9/30/93 13,349 15,214
10/31/93 13,612 15,607
11/30/93 13,159 15,097
12/31/93 13,590 15,613
1/31/94 13,938 16,101
2/28/94 13,775 16,043
3/31/94 12,959 15,196
4/30/94 13,046 15,288
5/31/94 12,677 15,114
6/30/94 12,057 14,606
7/31/94 12,122 14,845
8/31/94 12,590 15,672
9/30/94 12,590 15,620
10/30/94 12,546 15,557
11/30/94 11,894 14,928
12/31/94 12,165 15,329
1/31/95 11,705 25,135
2/28/95 12,044 15,764
3/31/95 12,307 16,033
4/30/95 12,515 16,390
5/31/95 12,624 16,672
6/30/95 13,116 17,537
7/31/95 14,178 18,548
8/31/95 14,418 18,931
9/30/95 14,571 19,270
10/31/95 14,013 18,406
*net of fees and expenses
Past performance is not predictive of future performance.
<PAGE>
U.S. SMALL COMPANY PORTFOLIO
PORTFOLIO OF INVESTMENTS
October 31, 1995
(expressed in U.S. dollars)
Shares Value
------ -----
COMMON STOCKS (89.7%)
BANKS (6.3%)
13,510 CCB Financial Corp. .................................... $ 667,056
6,440 Deposit Guaranty Corp. ................................. 284,165
9,790 FirstMerit Corp. ....................................... 260,659
8,570 Keystone Financial, Inc. ............................... 280,132
10,210 ONBANcorp, Inc. ........................................ 301,195
22,800 Premier Bancorp, Inc.* ................................. 471,675
11,290 Summit Bancorporation .................................. 318,237
8,990 Union Planters Corp. ................................... 275,319
5,280 Zions Bancorporation ................................... 366,960
---------
3,225,398
---------
COMMERCIAL SERVICES (1.0%)
23,070 NFO Research, Inc.* .................................... 513,308
---------
CONSUMER DURABLES (4.8%)
28,220 Arctco, Inc. ........................................... 321,003
5,370 Broderbund Software, Inc.* ............................. 373,215
12,070 Cobra Golf, Inc.* ...................................... 316,838
19,000 Department 56, Inc.* ................................... 862,125
17,640 Thor Industries, Inc. .................................. 280,035
37,930 Winnebago Industries, Inc. ............................. 303,440
---------
2,456,656
---------
CONSUMER NON-DURABLES (5.6%)
32,300 Authentic Fitness Corp. ................................ 662,150
59,190 Hudson Foods, Inc. - Class A ........................... 836,059
26,325 Nautica Enterprises, Inc.* ............................. 904,922
16,160 Riviana Foods, Inc. .................................... 211,090
11,830 Timberland Co. - Class A* .............................. 227,728
---------
2,841,949
---------
CONSUMER SERVICES (2.4%)
22,065 Applebee's International, Inc........................... 616,441
15,370 Carmike Cinemas, Inc. - Class A* ....................... 320,849
7,500 Grand Casinos, Inc.* ................................... 298,125
---------
1,235,415
---------
ELECTRONIC TECHNOLOGY (13.2%)
35,290 Chips & Technologies, Inc.* ............................ 308,788
7,960 Cognex Corp.* .......................................... 477,600
16,440 Cypress Semiconductor Corp.* ........................... 579,510
22,700 Helix Technology Corp. ................................. 839,900
11,060 Integrated Device
Technology, Inc.* .................................... 210,831
24,140 International Rectifier Corp.* ......................... 1,089,318
9,780 Kemet Corp.* ........................................... 334,965
5,290 Maxim Integrated Products, Inc.* ....................... 395,097
8,090 Microchip Technology, Inc.* ............................ 320,566
3,720 Novellus Systems, Inc.* ................................ 255,750
10,050 Read-Rite Corp.* ....................................... 351,122
21,110 Thermedics, Inc.* ...................................... 387,896
5,360 U.S. Robotics Corp.* ................................... 498,480
12,320 Vicor Corp.* ........................................... 247,940
9,230 VLSI Technology, Inc.* ................................. 216,905
6,230 Zilog, Inc.* ........................................... 221,165
---------
6,735,833
---------
ENERGY MINERALS (1.3%)
13,060 Ashland Coal, Inc. ..................................... 310,175
54,960 Plains Resources, Inc.* ................................ 374,415
---------
684,590
---------
FINANCE (9.6%)
15,220 Charter One Financial, Inc. ............................ 430,916
18,380 Finova Group, Inc. ..................................... 831,695
8,850 First Indiana Corp. .................................... 223,463
3,942 Fund American Enterprises, Inc.* ....................... 271,988
26,690 Manufactured Home
Communities, Inc. .................................... 440,385
16,100 PHH Corp. .............................................. 704,375
9,280 Pioneer Group, Inc. .................................... 243,600
13,810 Roosevelt Financial Group, Inc. ........................ 220,960
43,376 Security Capital Industrial Trust ...................... 710,282
8,000 TCF Financial Corp. .................................... 470,000
13,706 United Companies
Financial Corp. ...................................... 385,481
---------
4,933,145
---------
HEALTH SERVICES (5.8%)
8,240 Cerner Corp.* .......................................... 212,180
6,800 Community Health Systems, Inc.* ........................ 215,900
15,210 Lincare Holdings, Inc.* ................................ 381,201
8,870 Medaphis Corp.* ........................................ 281,623
11,030 Omnicare, Inc. ......................................... 399,838
18,180 Orthodontic Centers of
America, Inc.* ....................................... 588,578
12,900 PhyCor, Inc.* .......................................... 472,463
15,715 Vencor, Inc.* .......................................... 436,091
---------
2,987,874
---------
HEALTH TECHNOLOGY (2.5%)
14,270 Idexx Laboratories, Inc.* .............................. 577,935
51,910 North American Biologicals, Inc.* ...................... 418,524
6,240 Sybron International Corp.* ............................ 265,200
---------
1,261,659
---------
<PAGE>
U.S. SMALL COMPANY PORTFOLIO
PORTFOLIO OF INVESTMENTS
October 31, 1995 (continued)
(expressed in U.S. dollars)
Shares Value
------ -----
INDUSTRIAL SERVICES (3.9%)
8,000 Granite Construction, Inc. ............................. $ 228,000
21,630 J. Ray McDermott, S.A.* ................................ 327,154
57,140 Pride Petroleum Services, Inc.* ........................ 499,975
8,310 Sonat Offshore Drilling, Inc............................ 263,843
31,390 USA Waste Services, Inc.* .............................. 659,190
-----------
1,978,162
-----------
INSURANCE (5.0%)
16,000 Allied Group, Inc. ..................................... 514,000
19,750 Commerce Group, Inc. ................................... 402,406
15,275 Orion Capital Corp. .................................... 626,275
15,700 Protective Life Corp. .................................. 447,450
29,330 US Facilities, Corp. ................................... 557,270
-----------
2,547,401
-----------
NON-ENERGY MINERALS (4.7%)
37,030 Birmingham Steel Corp. ................................. 564,708
20,620 Fibreboard Corp.* ...................................... 494,880
47,290 Kinross Gold Corp.* .................................... 342,853
10,120 Magma Copper Co.* ...................................... 169,510
36,090 Republic Gypsum Co. .................................... 424,058
18,790 Rouge Steel Co. - Class A .............................. 408,683
-----------
2,404,692
-----------
PROCESS INDUSTRIES (3.3%)
14,330 Chesapeake Corp. ....................................... 438,856
6,650 Cytec Industries, Inc.* ................................ 364,088
27,650 Mercer International, Inc. - SBI* ...................... 637,678
16,000 Northland Cranberries, Inc. ............................ 272,000
-----------
1,712,622
-----------
PRODUCER MANUFACTURING (4.4%)
6,510 AGCO Corp. ............................................. 291,323
48,970 Flow International Corp.* .............................. 538,670
31,420 Indresco, Inc.* ........................................ 538,068
18,000 Kennametal, Inc. ....................................... 560,250
40,530 Simpson Industries, Inc. ............................... 341,972
-----------
2,270,283
-----------
RETAIL TRADE (4.3%)
19,000 Eckerd Corp.* .......................................... 752,875
9,690 Fastenal Co. ................ .......................... 337,333
24,540 Sunglass Hut International, Inc.* ...................... 665,648
26,385 Williams-Sonoma, Inc.* ................................. 461,738
---------
2,217,594
---------
TECHNOLOGY SERVICES (2.8%)
6,660 America Online, Inc.* .................................. 533,216
6,850 Sterling Software, Inc.* ............................... 315,956
9,740 Sungard Data Systems, Inc.* ............................ 271,503
9,790 System Software Assoc., Inc............................. 302,878
-----------
1,423,553
-----------
TELECOMMUNICATIONS (5.5%)
28,920 Acme-Cleveland Corp. ................................... 632,625
28,000 Aspect Telecommunications
Corp.* ................................................. 969,500
39,330 Boston Technology, Inc.* ............................... 545,704
5,020 Picturetel Corp.* ...................................... 330,693
5,330 Stratacom, Inc.* ....................................... 328,461
-----------
2,806,983
-----------
TRANSPORTATION (1.8%)
15,540 Wisconsin Central
Transportation Corp.* ................................ 932,400
-----------
UTILITIES (1.5%)
9,410 KN Energy, Inc. ........................................ 241,131
22,120 Sierra Pacific Resources ............................... 517,055
-----------
758,186
-----------
TOTAL COMMON STOCKS
(identified cost $38,547,525) .......................... $45,927,703
-----------
Principal
Amount
--------
TIME DEPOSITS (10.0%)
$5,150,000 State Street Bank (Cayman)
5.50%, 11/7/95
(identified cost $5,150,000)........................ $ 5,150,000
-----------
TOTAL INVESTMENTS (identified cost $43,697,525) (a) .. 99.7% $51,077,703
CASH AND OTHER ASSETS IN EXCESS OF LIABILITIES ....... 0.3 148,716
----- -----------
NET ASSETS ........................................... 100.0% $51,226,419
===== ===========
- ---------------
* non-income producing security
(a) The aggregate cost for federal income tax purposes is $43,757,733, the
aggregate gross unrealized appreciation is $9,371,269, and the aggregate
gross unrealized depreciation is $2,051,299, resulting in net unrealized
appreciation of $7,319,970.
See Notes to Financial Statements.
<PAGE>
U.S. SMALL COMPANY PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
October 31, 1995
(expressed in U.S. dollars)
ASSETS:
Investments in securities, at value (identified cost
$43,697,525) (Note 1) ..................................... $51,077,703
Cash ........................................................ 181,010
Receivables for:
Dividends ................................................ 26,956
Interest ................................................. 787
Deferred organization expenses (Note 1) ..................... 10,708
-----------
Total Assets ........................................ 51,297,164
-----------
LIABILITIES:
Payables for:
Investment advisory fee (Note 2) ......................... 29,788
Foreign withholding taxes ................................ 6,780
Administrative fee (Note 2) .............................. 1,604
Accrued expenses and other liabilities ................... 32,573
-----------
Total Liabilities ................................... 70,745
-----------
NET ASSETS ..................................................... $51,226,419
===========
Net Assets Consist of:
Paid-in capital ............................................ 43,846,241
Net unrealized appreciation on investments ................. 7,380,178
-----------
Net Assets ..................................................... $51,226,419
===========
See Notes to Financial Statements.
<PAGE>
U.S. SMALL COMPANY PORTFOLIO
STATEMENT OF OPERATIONS
For the period January 17, 1995 (commencement of operations) to October 31, 1995
(expressed in U.S. dollars)
<TABLE>
<CAPTION>
<S> <C> <C>
INVESTMENT INCOME:
Income:
Dividends (net of foreign withholding tax of $53,437) $ 365,511
Interest ............................................ 80,984
-----------
Total Income .................................... 446,495
-----------
Expenses:
Investment advisory fee (Note 2) .................... 283,032
Custodian fee (Note 3) .............................. 49,472
Administrative fee (Note 2) ......................... 15,240
Trustees' fees and expenses (Note 2) ................ 10,149
Amortization of organization expenses (Note 1) ...... 2,005
Miscellaneous ....................................... 17,932
-----------
Total Expenses ...................................... 377,830
Fees paid indirectly (Note 3) ................... (41,383)
-----------
Net Expenses .................................... 336,447
-----------
Net Investment Income ........................... 110,048
-----------
NET REALIZED AND UNREALIZED GAIN (Notes 1 and 3):
Net realized gain on investments ....................... 2,365,906
Net change in unrealized appreciation on investments
Beginning of period .................................. --
End of period ........................................ $ 7,380,178
Less unrealized appreciation acquired in connection with
59 Wall Street Small Company Fund contribution (Note 1) (1,223,663)
-----------
Net change in unrealized appreciation on investments ... 6,156,515
-----------
Net Realized and Unrealized Gain .................. 8,522,421
-----------
Net Increase in Net Assets Resulting from Operations ... $ 8,632,469
===========
</TABLE>
See Notes to Financial Statements.
<PAGE>
U.S. SMALL COMPANY PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
(expressed in U.S. dollars)
<TABLE>
<CAPTION>
For the period
January 17, 1995
(commencement of
operations) to
October 31, 1995
----------------
<S> <C>
INCREASE IN NET ASSETS:
Operations:
Net investment income .......................................... $ 110,048
Net realized gain on investments ............................... 2,365,906
Net change in unrealized appreciation on investments ........... 6,156,515
------------
Net increase in net assets resulting from operations ....... 8,632,469
------------
Capital transactions:
Proceeds from contributions .................................... 76,125,240
Value of withdrawals ........................................... (33,631,390)
------------
Net increase in net assets resulting from capital transactions 42,493,850
------------
Total increase in net assets ........................... 51,126,319
NET ASSETS:
Beginning of period ................................................. 100,100
------------
End of period ....................................................... $ 51,226,419
============
</TABLE>
See Notes to Financial Statements.
<PAGE>
U.S. SMALL COMPANY PORTFOLIO
FINANCIAL HIGHLIGHTS
(expressed in U.S. dollars)
For the period
January 17, 1995
(commencement of
operations) to
October 31, 1995
----------------
Ratios/Supplemental Data:
Net assets, end of period (000's omitted) ............. $51,226
Expenses as a percentage of average net assets:
Expenses paid by Portfolio .......................... 0.77%
Expenses paid by commissions** ...................... 0.05%
Expenses offset arrangements ........................ 0.05%
------
Total expenses .................................. 0.87%*
Ratio of net investment income to average net assets .. 0.25%*
Portfolio turnover rate ............................... 115%
Average commission rate paid per share ................ $ 0.08
- ------------------
* Annualized.
** A portion of the Portfolio's securities transactions are directed to certain
unaffiliated brokers which in turn use a portion of the commissions they
receive from the Portfolio to pay other unaffiliated service providers on
behalf of the Portfolio for services provided for which the Portfolio would
otherwise be obligated to pay.
See Notes to Financial Statements.
<PAGE>
U.S. SMALL COMPANY PORTFOLIO
NOTES TO FINANCIAL STATEMENTS
(expressed in U.S. dollars)
1. Organization and Significant Accounting Policies. U.S. Small Company
Portfolio (the "Portfolio") is registered under the Investment Company Act of
1940, as amended, as a diversified, open-end management investment company which
was organized as a trust under the laws of the State of New York on June 15,
1993. The Portfolio commenced operations on January 17, 1995 and received a
contribution of certain assets and liabilities, including securities, with a
value of $33,464,236 (including $1,223,663 of unrealized appreciation) on that
date from The 59 Wall Street Small Company Fund in exchange for a beneficial
interest in the Portfolio. The Declaration of Trust permits the Trustees to
create an unlimited number of beneficial interests in the Portfolio.
The financial statements have been prepared in accordance with accounting
principles generally accepted in the United States of America, and reflect the
following policies:
A. Valuation of Investments. (1) The value of investments listed on
a securities exchange is based on the last price on that exchange prior to
the time when assets are valued, or in the absence of recorded sales, at
the average of readily available closing bid and asked prices on such
exchange; (2) unlisted securities are valued at the average of the quoted
bid and asked prices in the over-the-counter market; (3) securities or
other assets for which market quotations are not readily available are
valued at fair value in accordance with procedures established by and
under the general supervision and responsibility of the Trustees. Such
procedures include the use of independent pricing services, which use
prices based upon yields or prices of securities of comparable quality,
coupon, maturity and type; indications as to the value from dealers; and
general market conditions; (4) short-term investments which mature in 60
days or less are valued at amortized cost if their original maturity was
60 days or less, or by amortizing their value on the 61st day prior to
maturity, if their original maturity when acquired by the Portfolio was
more than 60 days, unless this is determined not to represent fair value
by the Trustees.
B. Accounting for Investments. Security transactions are accounted
for on the trade date. Realized gains and losses on security transactions
are determined on the identified cost method. Dividend income and other
distributions from portfolio securities are recorded on the ex-dividend
date except that, if the ex-dividend date has passed, certain dividends
from foreign securities are recorded as soon as the Portfolio is informed
of the ex-dividend date. Dividend income is recorded net of foreign taxes
withheld where recovery of such taxes is not assured. Interest income is
accrued daily.
C. Federal Income Taxes. The Portfolio will be treated as a
partnership for federal income tax purposes. As such, each investor in the
Portfolio will be subject to taxation on its share of the Portfolio's
ordinary income and capital gains. It is intended that the Portfolio's
assets will be managed in such a way that an investor in the Portfolio
will be able to comply with the provisions of the Internal Revenue Code
applicable to regulated investment companies. Accordingly, no provision
for federal income taxes is necessary.
D. Deferred Organization Expenses. Expenses incurred by the
Portfolio in connection with its organization are being amortized on a
straight-line basis over a five-year period.
2. Transactions with Affiliates.
Investment Advisory Fee. The Portfolio has an investment advisory
agreement with Brown Brothers Harriman & Co. (the "Adviser") for which it pays
the Adviser a fee calculated daily and paid monthly at an annual rate equivalent
to 0.65% of the Portfolio`s average daily net assets. For the period January 17,
1995 through October 31, 1995, the Portfolio incurred $283,032 for advisory
services.
<PAGE>
U.S. SMALL COMPANY PORTFOLIO
NOTES TO FINANCIAL STATEMENTS (continued)
(expressed in U.S. dollars)
Administrative Fee. The Portfolio has an administrative agreement with
Brown Brothers Harriman Trust Company (Cayman) Ltd. (the "Administrator") for
which it pays the Administrator a fee calculated daily and paid monthly at an
annual rate equivalent to 0.035% of the Portfolio's average daily net assets.
The Administrator has a subadministration agreement with Signature Financial
Group (Cayman) Ltd. for which Signature Financial Group (Cayman) Ltd. receives
such compensation as is from time to time agreed upon. For the period January
17, 1995 through October 31, 1995, the Portfolio incurred $15,240 for
administrative services.
Trustee Fee. Each Trustee of the Portfolio receives an annual retainer
paid by the Portfolio. Each Trustee is also reimbursed for out-of-pocket
expenses incurred in connection with board meetings. For the period January 17,
1995 through October 31, 1995, the Portfolio incurred $10,149 for Trustees fees.
3. Investment Transactions. For the period January 17, 1995 through
October 31, 1995, the cost of purchases and the proceeds of sales of investment
securities other than short-term investments were $63,168,410 and $56,121,807,
respectively. For that same period, the Portfolio paid brokerage commissions of
$75,463 to Brown Brothers Harriman & Co. for transactions executed on its
behalf. Custody fees for the Portfolio were reduced by $21,000 as a result of
the Portfolio directing a portion of its portfolio transactions to certain
unaffiliated brokers. Additionally, custody fees for the Portfolio were further
reduced by $20,383 as a result of an expense offset arrangement with the
Portfolio's custodian.
<PAGE>
INDEPENDENT AUDITORS' REPORT
Trustees and Investors
U.S. Small Company Portfolio:
We have audited the accompanying statement of assets and liabilities,
including the portfolio of investments, of U.S. Small Company Portfolio as of
October 31, 1995, and the related statement of operations, statement of changes
in net assets, and financial highlights for the period January 17, 1995
(commencement of operations) to October 31, 1995 (all expressed in U.S.
dollars). These financial statements and financial highlights are the
responsibility of the Portfolio's management. Our responsibility is to express
an opinion on these financial statements and financial highlights based on our
audit.
We conducted our audit in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements and financial highlights are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. Our procedures included confirmation of
securities owned at October 31, 1995 by correspondence with the custodian. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, such financial statements and financial highlights present
fairly, in all material respects, the financial position of U.S. Small Company
Portfolio at October 31, 1995, and the results of its operations, the changes in
its net assets, and its financial highlights for the period January 17, 1995
(commencement of operations) to October 31, 1995 in conformity with accounting
principles generally accepted in the United States of America.
DELOITTE & TOUCHE
Grand Cayman, Cayman Islands
December 12, 1995
<PAGE>
The 59 Wall Street Fund, Inc.
Investment Adviser and
Administrator
Brown Brothers Harriman & Co.
59 Wall Street
New York, New York 10005
Distributor
59 Wall Street Distributors, Inc.
6 St. James Avenue
Boston, Massachusetts 02116
Shareholder Servicing Agent
Brown Brothers Harriman & Co.
59 Wall Street
New York, New York 10005
(212) 493-8100
This report is submitted for the general information of shareholders and is not
authorized for distribution to prospective investors unless preceded or
accompanied by an effective prospectus. Nothing herein contained is to be
considered an offer of sale or a solicitation of an offer to buy shares of the
Funds. Such offering is made only by prospectus, which includes details as to
offering price and other material information.
